Quotes of the day

posted at 10:11 pm on November 29, 2012 by Erika Johnsen

Boehner said he was “disappointed” after a phone call with Obama on Wednesday night and a meeting with Treasury Secretary Timothy Geithner on Thursday moved the two sides no closer to an agreement to avert the tax hikes and spending cuts that will be triggered at the start of 2013 unless Congress intervenes.

“I’m disappointed in where we are and disappointed in what’s happened over the last couple of weeks,” Boehner, of Ohio, told reporters after a private session with Geithner at the Capitol.

“No substantive progress has been made in the talks between the White House and the House over the last two weeks,” he said. “There’s been no serious discussion of spending cuts so far, and unless there is, there’s a real danger of going off the fiscal cliff.”

“This is a real problem. Every day, the delay brings us one step closer to the fiscal cliff that we simply must avoid,” McConnell said.

***

Avoid letting the latest figure on U.S. economic activity cheer you. Gross domestic product in the third quarter did indeed grow, but that expansion was built on a weak structure that threatens to collapse. …

Dim gloom now hovers over the end of 2012. Market participants say a fiscal cliff solution is key to motivating both shoppers and businesses. So far, only contradictory and perplexing signals emanate from Washington, D.C., even though the anxiety and worry threatens to dampen the critical Christmas shopping period, in which retailers derive 40% of annual revenue.

Economists currently predict fourth-quarter economic growth between 1% to 1.5%. This would be the lowest point in two years, and a far cry from the level needed to substantial improve the economy or lower unemployment.

***

Already, local news stations are running “fiscal cliff” countdown clocks. Fevered curiosity over the ebb and flow of cliff negotiations is rising and may soon creep near the Kardashian or One Direction pop-culture summit. When the fate of marginal tax rates and the Medicare eligibility age compete with boy bands and wannabee wannabees, you know legislative hysteria is on the loose. …

Hysteria, like a hangman’s noose, focuses the mind. It can transform rock-ribbed ideologies into Silly Putty—or at least soggy holiday fruitcake. It can turn voters and those who represent them into instant pragmatists. When fiscal-cliff negotiations and not reindeer hooves become this year’s holiday clatter, it will be because voters know what is the matter: Washington, if it remains paralyzed, will sentence the country to the first premeditated recession not imposed by German bankers (pity the Greeks) in the history of Western civilization.

***

Democrats have some inherent advantages in the impending fiscal negotiations, but they are mercilessly exploiting one advantage they do not deserve at all: their claim that they wish only to raise the top rate of income tax to 1990s levels. That’s true for 2013. But in 2014, the taxes in Obamacare bite. With those surtaxes, the top rate of tax will rise beyond the Clinton levels to levels not seen since before the tax reform of 1986. That’s a point that deserves repetition and underscoring, again and again.

***

For these wealthy taxpayers, powerful accountants and tax lawyers always make sure their “income” is rarely subject to top marginal tax rates. But that’s not the case for small-business owners who make far less but are still subjected to the pain of tax hike plans passed under the guise of making the tax code more equitable. Because these taxpayers can’t afford the best accountants that money can buy, they bear the brunt of Washington’s feel-good fantasy tax on the ultra-rich.

If politicians really want to make millionaires and billionaires pay at a tax rate that most of us endure on April 15th, their moral pangs would be soothed more effectively by following Buffett’s minimum tax plan or focusing on raising the tax rates on capital gains and carried interest. As Mr. Buffett told me yesterday, the richest Americans won’t be affected by the President’s plan to push the top marginal income tax rate back to 39.6 percent.

***

But if raising taxes would lead us toward trouble, why would raising taxes only on some people (“the rich”) not have some of the same harmful effect? Since the top 1% of income-earners pay about 40% of the income tax, raising taxes only on the 1% still significantly increases the tax burden on the private sector. …

Any notion that it matters whom you tax is simply a parlor game played by the class-warfare crowd. There are only two repositories of money—the private sector (which efficiently distributes goods) and the public sector (which doesn’t distribute anything well). No central planner possesses the omniscience to assign fairness. The only guide to fairness of distribution that I can imagine is the minute-by-minute vote of the most exacting and direct democracy ever known: the marketplace. …

Any legislator considering capitulating on the Taxpayer Protection Pledge should remember that revenue is down now because of the recession and slow economic growth, not because of the lower tax rates that have been in place for almost a decade. Raising revenue by increasing rates or ending deductions won’t spur the economy. It may even depress the meager economic growth we have and raise less tax revenue.

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